UPDATE 1-Betfair wins German online licence

Reuters Staff

2 Min Read

By Rosalba O‘Brien and Maria Sheahan

LONDON/FRANKFURT, May 3 (Reuters) - The first licences to offer online gambling in Germany have been awarded, with British online betting firm Betfair benefiting from the state of Schleswig Holstein’s liberalised gambling rules.

The northern state, whose centre-right coalition government voted in favour of relaxing its gambling laws in September, said on Thursday that it had awarded three licences valid to 2018 - one to Betfair for sports betting, one to Germany’s Jaxx AG and one to the state lottery.

The other 15 German states have backed more restrictive laws that have been criticised by betting companies, who say they will favour state monopolies. The European Commission has also raised questions over the planned restrictions.

Schleswig Holstein’s laws demand a 20 percent tax on gross profits rather than a more punitive tax on turnover, and also allow for online casino-style gambling, which the other states want to ban.

Analysts at BarCap estimated that the tax payment would equate to about 3 million pounds ($4.9 million), or about 3 percent of core Betfair earnings.

“We view this as a significant positive for the company, given that it further erodes the bear case on the stock that Betfair would be unable to get licensed outside of the UK,” the analysts said.

Schleswig Holstein’s interior ministry said it expected to award licences for poker and other casino-style games in the coming weeks, which Betfair has also applied for.

The largely illegal German sports betting market is estimated to be worth at least 5 billion euros ($6.6 billion).